Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $2,300,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 35 percent of these bonds at 92 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2019 b. December 31, 2020 c. December 31, 2021 view transaction list No 1 2 3 transaction list Date December 31, 2019 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Gain on retirement of bonds December 31, 2020 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton December 31, 2021 Bonds payable Premium on bonds payable Interest income Accounts Investment in bonds Interest expense Investment in Hamilton Debit 805,000 740,600 Credit Ⓒ
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2017, Hamilton sold $2,300,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 35 percent of these bonds at 92 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. December 31, 2019 b. December 31, 2020 c. December 31, 2021 view transaction list No 1 2 3 transaction list Date December 31, 2019 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Gain on retirement of bonds December 31, 2020 Bonds payable Premium on bonds payable Interest income Investment in bonds Interest expense Investment in Hamilton December 31, 2021 Bonds payable Premium on bonds payable Interest income Accounts Investment in bonds Interest expense Investment in Hamilton Debit 805,000 740,600 Credit Ⓒ
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject: accounting
Transcribed Image Text:Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the
subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the
equity method in its internal records to account for its investment in Hamilton.
On January 1, 2017, Hamilton sold $2,300,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 9 percent
payable every December 31. Cairns acquired 35 percent of these bonds at 92 percent of face value on January 1, 2019. Both
companies utilize the straight-line method of amortization.
Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no
entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. December 31, 2019
b. December 31, 2020
c. December 31, 2021
view transaction list
No
1
2
3
transaction list
Date
December 31, 2019 Bonds payable
Premium on bonds payable
Interest income
Investment in bonds
Interest expense
Gain on retirement of bonds
December 31, 2020 Bonds payable
Premium on bonds payable
Interest income
Investment in bonds
Interest expense
Investment in Hamilton
December 31, 2021 Bonds payable
Accounts
Premium on bonds payable
Interest income
Investment in bonds.
Interest expense
Investment in Hamilton
Debit
805,000
740,600
Credit
Ⓒ
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